MW: Oil prices fluctuate ahead of key inventories data
By Claudia Assis & Kate Gibson, MarketWatch
SAN FRANCISCO (MarketWatch) -- Crude oil prices seesawed after a weak start on Wednesday as some saw the market oversold and the euro edged higher against the dollar.
Crude-oil futures for July delivery, the most active contract, declined 11 cents to $72.61 a barrel on the Comex division of the New York Mercantile Exchange. The front-month June contract lost 4 cents to $69.39 a barrel. Prices had briefly rebounded ahead of a key report on inventories due 10:30 a.m. Eastern.
Some investors have judged the latest losses to be overdone. Helping matters a bit, the euro turned higher against the dollar after plunging to a four-year low. A rising dollar tends to impact commodities negatively because it makes them more expensive to holders of other currencies.
Oil for June delivery declined to a seven-month low on Tuesday, in the red for the sixth consecutive session. See Tuesday's Futures Movers column.
Oil had held to losses following the U.S. government report that consumer prices fell 0.1% last month as energy, housing, auto and clothing costs declined. Read about the first decline in the CPI since March 2009.
The euro (CUR_EURUSD 1.2349, +0.0166, +1.3626%) had fallen to a four-year low but recently traded at $1.23. U.S. stocks opened lower and gold and other metals fell as markets were under pressure from Germany's short-sale ban on short sales of euro-zone bonds, derivatives and other financial instruments.
The ban seemingly only reinforced worries over the fiscal health of European governments.
"The European fiscal crisis and the generalization of budget adjustment programs seem to have acted as an eye-opener," Christophe Barret, global oil analyst at Credit Agricole, said in a report this week, pointing out that since the start of April, West Texas Intermediate crude, the benchmark product trading on Nymex, had lost $15 a barrel.
"This evolution is more or less in line with what would have been dictated by still-weak fundamentals, and appears as a healthy correction to inflated prices," he said.
Traders are also looking ahead to weekly data on petroleum supplies due from the Energy Department's Energy Information Administration.
Analysts polled by Platts expect a rise of 950,000 barrels in crude supplies.
The market will be looking specifically at inventories at the Cushing hub. Oil prices for further-out contracts have traded at a premium over front-month prices as inventories rise in Cushing, Okla., the delivery point for futures traded on the Nymex.
Overall, analysts at Credit Suisse said they "remain cautious on the near-term prospects of crude oil, but think that medium-term fundamentals remain supportive."
